My first home purchase was an owner financed home using a lease option contract. I was able to get conventional Fannie Mae financing less than a year after moving in to this home.
Here is how I did it.
I was actually driving around different areas that I wanted to live. I saw a home with a for rent sign in the front yard.
When I called the owner I asked him if he would do owner financing. He said he would do a two-year lease option with $2500 down and the first months rent payment.
I signed the contract and moved in just before Christmas in 2001. I closed on the house a few months later, only having to pay closing costs at closing.
Back then there was no minimum time of ownership and it was a lot easier to get financing. After making on time payments for several months I was able to treat the transaction as a refinance and close without any additional down payment.
Things are different today, lenders no longer treat rent to own or lease option transactions as a refinance. The will still allow refinancing of a contract for deed aka land contract.
It’s also just as easy to use a FHA purchase loan to pay off an owner financing contract. You’ll need a 3.5% down payment and closing cost money. The best way to write the contract is with the seller paying 3% to 6% of the contract sales price towards your (buyer) closing costs.
You’ll be able to use the closing cost credit to cover all or most of your closing costs. This means you can pay off a $100,000 contract with just $3,500 of your own money into the deal. Learn more about qualifying for a FHA home loan by following the link to C & C Financial Services mortgage website.